Gold Climbs to $4,600, Is There a "Big Problem" in the US?
Gold and silver both set new records after global markets were shocked by the threat of criminal indictments against the Federal Reserve (The Fed), coupled with escalating geopolitical tensions stemming from major protests in Iran. This combination immediately triggered demand for safe haven assets.
Gold prices briefly soared to US$4,600/ounce, while silver also soared to US$85/ounce. This rapid rise confirmed that investors were seeking refuge amid growing uncertainty.
The primary trigger came from the US: concerns that the Fed's independence was being compromised. Jerome Powell argued that this legal threat should be viewed in the context of broader political pressure to influence interest rate decisions. When markets perceive interest rate policy as being "dragged" into the political realm, confidence in the dollar typically falters—and gold benefits.
Geopolitically, the situation in Iran added fuel to the rally. Heated protests and potential instability made investors increasingly defensive. Furthermore, Trump's statement that the US was considering various options added to tensions and increased demand for safe havens.
The market reaction was also clear: the dollar weakened and US stock futures fell, while gold continued to strengthen. The pattern is classic: when institutional and geopolitical risks rise simultaneously, capital flows tend to flow to assets perceived as safe.
Furthermore, the gold rally was also supported by expectations of an interest rate cut remaining open this year. Weaker US employment data kept the market believing the opportunity for a rate cut still existed. When interest rates fall, the opportunity cost of holding gold (which does not pay interest) becomes lower, making gold more attractive.
Going forward, the market will monitor US tariff decisions, comments from central bank officials, and developments in Iran. As long as the "Fed vs. politics" issue and geopolitical tensions persist, gold and silver have the potential to continue moving aggressively with high volatility.
5 Key Points:
- Gold and silver set records as the Fed and geopolitical risks from Iran rise simultaneously.
- Key concerns: The Fed's independence is questioned, the dollar is under pressure, gold benefits.
- Iran's protests are increasing safe-haven demand, making precious metals even more sought after.
- The dollar weakens, stock futures fall, gold strengthens: the market enters defensive mode.
- Next focus: US tariff agenda, Fed comments, and geopolitical updates that could trigger major swings. (asd)
Source: Bloomberg
